What Canadian Capital Gains Tax Brings

Now that we are almost three months into 2017, some people will start to prepare their 2016 tax report (and a lot of them will wait until the last minute but that is another story). While filling and sending your tax report to the government is mandatory, it doesn’t mean that you should not try the least taxes as possible. Whether it is by taking advantage of every credit and deductions available to you or putting money in a RRSP, a Chartered Professional Accountant (CPA) will help you to minimize what you need to pay to the government. Today, we decided to talk about one aspect that can have a big influence on the amount of taxes that you will pay in Canada, the Canadian Capital Gains Tax.

What is the Canadian Capital Gains Tax?

The Canadian Capital Gains Tax is a tax that was introduced in the country back in 1972 as an initiative to create a more equitable taxation system in Canada and a way to support the social security system. With the Canadian Capital Gains Tax’s rate being more than 50%, it is important for you as a taxpayer to consult an expert to optimize your situation regarding this tax.

How is a CPA Able to Help You Regarding the Canadian Capital Gains Tax?

If you are selling or transferring a business, you may be subjected to pay taxes because of your assets like shareholdings and properties (commercial or residential) that are linked to your business. Also, if your are planning on purchasing an asset, you may have to pay Canadian Capital Gains Tax. Speaking with an accountant prior to pulling the trigger on such transactions will ensure that you will not pay more tax than you have to.

Are There Exemptions to This Tax?

Since almost nothing is black or white in life, there are indeed exemptions to this tax. However, they can be confusing to people who do not work in the accounting or finance field so discussing with a qualified accountant to verify if you meet the criterias to benefit from these exemptions. Here are some examples :

  • People who are retired or are close to retirement may be exempt from the Canadian Capital Gains Tax
  • Small business corporations with 90% of its assets involved actively in the business can qualify
  • Individuals who own shares may be exempt if they owned shares for 24 months before selling and have used half of these assets actively in the business
  • Etc.


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